Markets likely to make slightly positive start; WPI data eyed

Indian markets ended lower with cut of over half a percent each on Wednesday, led by the last hour sell-off in banking stocks. Today, the markets are likely to make flat-to-positive start as market participants will be looking forward to Wholesale Price Index (WPI) to be released later in the day. Investors will be taking encouragement with SBI report showing that credit growth picked up rapid pace beginning September - jumping by Rs 1.08 lakh crore - mainly helped by housing, NBFC and lately MSME. Traders may take note of report that in perhaps the first instance, the finance ministry has kicked off the exercise to formulate the next budget by seeking suggestions on changes in direct and indirect taxes from industry and trade associations. Some support may come with report that India is the world's most open and investment friendly economy, Prime Minister Narendra Modi told business leaders of the BRICS group in Brasalia, urging them to invest in the country and take advantage of its limitless possibilities. However, weakness in Asian peers may weight on domestic sentiments. There may some cautiousness with the government data showing that India’s retail inflation unexpectedly quickened to a 16-month high at 4.62%, exceeding the central bank’s medium-term target for the first time since July 2018, as prices of kitchen staples such as onion and tomato skyrocketed. Also, a private report indicated that the gloom surrounding the Indian economy is likely to get worse in the months ahead. Meanwhile, markets regulator SEBI came out with a detailed disclosure framework for entities seeking listing of municipal debt securities issued on private placement basis. There will be some buzz in the telecom stocks as the Department of Telecom (DoT) issued notice to telecom operators to pay their revenue share dues within three months as directed by the Supreme Court. The DoT has given option to telecom operators to clear all the dues on self-assessment basis. There will be some reaction in sugar stocks with repro that as the Rs 15,000 crore soft loan scheme for sugar mills is moving at a snail's pace, the government has extended the moratorium period for repayments by six more months. Now, the moratorium period is one-and-a-half years.

The US markets ended mostly higher on Wednesday helped by a big jump in Walt Disney shares, while upside remained in check by fresh uncertainty over US-China trade relations. Asian markets are trading mostly in red on Thursday as investors awaited key Chinese data for clues on how much the 16-month trade war between Beijing and Washington has hit growth in the world's second-largest economy.

Back home, last hour sell-off dragged Indian equity bourses to their intraday low points on Wednesday, with Sensex & Nifty ending lower by around 230 and 75 points, respectively. Indices made a cautious start of the day, as State Bank of India’s Economic Research Department in its Ecowrap report sharply cut India’s Gross Domestic Product growth forecast to 5% for Fiscal Year 2019-20 from the earlier projection of 6%. Adding some worries, India's factory output growth, measured by the Index of Industrial Production, contracted by 4.3% in September as compared to a contraction 1.1% in August 2019 as all three broad-based sectors of capital goods production, consumer durables, and infrastructure and construction goods contracted. Volatility remained over the markets for the whole day, on weak cues from global markets. Domestic sentiments remained hampered, amid a report stating that venture investment activity in India slowed down both by value and deal volumes in October to $3.312 billion in 91 transactions on account of poor show by the realty sector. Separately, according to the latest survey released by National Council of Applied Economic Research, business confidence of India Inc declined to its lowest in six years in August-October. Traders overlooked Finance Minister Nirmala Sitharaman’s statement that the Government of India’s top priority is to put the farmers’ concerns and rural development on a larger landscape. Finally, the BSE Sensex fell 229.02 points or 0.57% to 40,116.06, while the CNX Nifty was down by 73.00 points or 0.61% to 11,840.45.